ESM10002 | Off-payroll working legislation: Chapter 10, ITEPA 2003 (from 6 April 2021): basic principles: key terms for the off-payroll working legislation

Chain payment (for NICs purposes) – A payment or money’s worth passed down the contractual chain that can reasonably be taken to be for the worker’s services to the client. Benefits will be subject to Class 1A NICs in the same way as normal employees.

Chain payment (for income tax purposes) – A payment, money’s worth or any other benefit passed down the contractual chain that can reasonably be taken to be for the worker’s services to the client.

Client – The person in receipt of the worker’s services. This person is sometimes referred to as the ‘end-client’.

Contractual chain – The chain of persons contracting with one another which the chain payment flows through. It starts with the person in receipt of the worker’s services (the client) and ends with the worker’s intermediary. Also known as the labour supply chain.

Deemed direct earnings (for NICs purposes) - The payment which is treated as earnings from an employment for NICs purposes from 6 April 2021 onwards.

Deemed direct payment (for income tax purposes) - The payment which is treated as earnings from an employment for tax purposes from 6 April 2021 onwards.

Note – For the rest of this guidance, where we refer to ‘deemed direct payment’ we also include ‘deemed direct earnings’ unless otherwise stated.

Deemed employer – This is the person treated as making the deemed direct payment to the worker. It is the person responsible for the deduction of tax and NICs and payment of apprenticeship levy, and paying these to HMRC. This may be the same person as the fee-payer, but it may be another person in the contractual chain if the fee-payer is not a qualifying person (see ESM10017).

End-of-line remuneration - A payment or benefit paid to the worker by their intermediary.

Fee-payer – This is the person in the contractual chain who sits immediately above the worker’s intermediary (see ESM10017).

Make (for NICs purposes) – The fee-payer is treated as making a chain payment where a transfer that is money’s worth is made.

Make (for PAYE purposes) – The fee-payer is treated as making a chain payment where a transfer that is money’s worth is made, or a benefit other than a payment or money’s worth is provided.

Medium/large-sized non-public sector organisation – an organisation that is not a public authority as defined in section 61L ITEPA 2003 and not small as defined by sections 60A – 60G ITEPA 2003.

Public authority – A public authority as defined by the Freedom of Information Act 2000 (FOIA), a body specified in section 23(3) of the Freedom of Information Act 2000, a Scottish public authority as defined by the Freedom of Information (Scotland) Act 2002 (FOISA), the Corporate Officer of the House of Commons, the Corporate Office of the House of Lords, the National Assembly for Wales Commission or the Northern Ireland Assembly Commission (see ESM10005).

Status Determination Statement (SDS) - the statement the client makes to state whether or not the worker would be either an employee or an office holder if they were engaged directly by the client. For the SDS to be valid the client must state their conclusion, with reasons, and take reasonable care in reaching that conclusion.

Wholly overseas client – A client who has no UK connection in the form of being UK resident or having a permanent establishment immediately before the beginning of the tax year. (See ESM10025)

Worker – The individual personally providing their services.